Megatrends

The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.

Dairy in Colombia

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Executive Summary

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Prospects

Sales of hard cheese recover in 2018

Economic deceleration and issues that negatively impacted the supply of milk (aphthous outbreak, long dry seasons, strikes by transporters) affected sales of cheese from 2016. Unit prices increased due to the poor weather conditions, as if there is no rain for the grass to grow, milk and its fat content are affected.

Innovations in cheese to reactivate growth

Due to the macroeconomic and milk production issues that affected sales of cheese, manufacturers innovated by offering new varieties, such as those made with buffalo milk, from brands such as DiBufala, and snacking cheese sticks, including Finesse by Alpina. The expansion of cheeses with denomination of origin, such as Paipa and Caqueta, is also strengthening local production and expanding sales of cheese in Colombia.

Massive events to strengthen the culture of cheese consumption

The “Salón del Queso” (Cheese Salon) annually organised by Carulla, the premium retail brand of Grupo Éxito, has become a tradition in the local cheese market. The goal of the event is to increase “cheese literacy” amongst consumers, to promote national and international cheese brands and to educate consumers about cheese and how to consume it.

Competitive Landscape

Colanta continues to lead cheese in 2018

Cooperativa Lechera Colanta remained the leader in cheese in 2018, thanks to its diverse portfolio, including soft and hard cheese. Along with popular soft cheese varieties known as quesos hilados, Colanta leads premium hard cheese, and it locally manufactures varieties such as Manchego, Emmenthal, pecorino, provolone and other globally-recognised cheeses.

Alpina Productos Alimenticios is making a strong bet on the cheese category by investing in new product development and innovation. The company is focused on developing its health and wellness cheese portfolio with the brand Finesse.

Private label is still not having a strong impact in cheese

The strong relationship between consumers and traditional brands such as Alpina and Colanta did not favour the growth of private label in cheese, which has been seen in other more commoditised categories, such as cow’s milk. Branded products have not neglected innovation in cheese, which is considered a category with an important need for knowhow and innovation.

Prospects

Innovation to stand out in a crowded category

Manufacturers of drinking milk products continue to rely on innovation to stand out in a crowded and competitive category. In 2017, Alpina launched its ultra-filtered, high-protein Actilife “super milk”, and in 2018 La Alquería launched Alquería Más, a fortified milk targeted towards the whole family.

Informality in drinking milk products

Drinking milk is known to experience a high rate of informality (close to 50%, according to trade sources). Despite the fact that raw milk commercialisation is regulated by Decree 1880 of 2011, a norm created to set up quality standards applicable to small milk sellers, the truth is that the fulfilment of all the sanitary and legal requirements currently in place is hard to audit.

Milk alternatives sees strong growth in Colombia

The dynamic performance of milk alternatives was boosted by new launches of almond-based drinks by major companies such as Productos Alimenticios Alpina, Team Foods and Productos Naturales de la Sabana. Consumers are still starting to gain knowledge about these new products, which have been marketed as healthier alternatives.

Competitive Landscape

Colanta remains the leader in drinking milk products in 2018

Cooperativa Lechera Colanta continued to lead drinking milk products in value terms in 2018. Despite the intention of brands such as Alpina with Actilife and La Alquería with Alquería Más to introduce innovations and differentiate from other competitors, sales in the category are highly driven by price and availability, and Colanta offer a good combination of both.

Private label sees important growth in 2018

After Cooperativa Lechera Colanta, which undertook an aggressive promotional strategy to sell milk surpluses, private label saw the biggest increase in share in 2018. Products such as Latti from D1 are rapidly growing thanks to their value for money proposition.

Major brands move into other milk alternatives

A few years ago, the offer of other milk alternatives was very small; limited to imported brands such as Silk and local brands such as Ensoy, which had more of a dietary supplement focus. With the arrival of Alpina and La Alquería, the category is gaining traction, and these brands are helping to expand the category, increasing consumer awareness and leveraging their strong distribution networks to take their brands further.

Prospects

Yoghurt fits well within the health and wellness trend

With the arrival of lactose-free yoghurt and the expansion of reduced fat and FF probiotic yoghurt from companies such as Alpina Productos Alimenticios, Cooperativa Lechera Colanta and Danone-Alqueria, yoghurt is consolidating as a key category within the health and wellness trend. The positioning of many brands, such as Finesse and Slight, as healthy, versatile products is supporting the expansion of consumption occasions for yoghurt.

Despite the popularity of kumis, Pasco is focusing on kefir

Colombians are very used to kumis, a very traditional fermented product which is included within sour milk products. This is the most important product in this category, and although has seen few innovations, during the review period Parmalat Colombia launched fruit flavoured kumis.

Yoghurt is expanding as an ingredient in other products

Aware of the strong impact of yoghurt amongst consumers looking for healthy packaged food alternatives, yoghurt is also increasingly being used as an ingredient in products in other categories, such as sweet biscuits, breakfast cereals and even jellies, from brands such as Quaker, Tosh, Nestlé and Grissly. Manufacturers are aiming to position products containing yoghurt in the health and wellness trend and leverage key elements such as probiotics, which are increasingly permeating other categories thanks to the most recent developments in the ingredients industry.

Competitive Landscape

Major companies continue to dominate

Alpina Productos Alimenticios and Cooperativa Lechera Colanta continued to lead yoghurt and sour milk products in 2018; this leadership reflects overall dairy products. Alpina is striving to consolidate even more in yoghurt and sour milk products, with its most recent advertising campaign featuring renowned Colombian football player Radamel Falcao García and his family.

Niche brands are expanding their yoghurt offer

The expansion of the yoghurt portfolios of niche brands such as Del Vecchio, DiBufala, Zorba and Pasco, amongst others, is expanding the offer of yoghurt in Colombia. Although the category is very competitive, and major companies such as Alpina Productos Alimenticios, Danone-Alqueria, Cooperativa Lechera Colanta and Parmalat Colombia dominate, smaller brands look to position themselves in niches with distinctive elements.

Private label is also leveraging the boom in yoghurt

Leveraging the dynamism in yoghurt, private label products such as Taeq from Grupo Éxito, and the new brands from booming discounters such as D1, Justo y Bueno and Ara, are trying to gain share by offering quality and value for money alternatives. Being loyal to its brand positioning, Taeq is expanding its reduced fat portfolio, and discounters are focusing more on indulgence along with value for money, offering flavoured yoghurt with fruits to be consumed as snacks.

Prospects

Chilled and shelf stable desserts competes with yoghurt

Chilled and shelf stable desserts saw steady but important growth over the review period. It has remained a mid-sized category in the local dairy market, and is still not as overcrowded as other dairy categories.

Innovation in flavoured condensed milk

Flavoured condensed milk includes arequipe, a very popular and traditional preparation in Colombia, and is the second best-selling category within other dairy in Colombia. Considering this, the category is evolving to meet consumers’ expectations.

Cream stands out as a key culinary ingredient

Through awareness-raising campaigns, key brands such as Alpina, La Alquería and Nestlé are encouraging consumers to expand their culinary horizons through the more advanced use of cream. This is also supported by the development of reduced fat products, or what are commonly recognised as “light” varieties, although there are still no widespread lactose-free brands.

Competitive Landscape

Alpina Productos Alimenticios remains the leader in other dairy in 2018

Alpina Productos Alimenticios led other dairy in 2018, thanks to its strong position in cream and its lead in flavoured condensed milk. Along with these big categories, in which innovation continues to leverage growth, Alpina is also promoting its chilled dairy desserts brands such as Alpinette, and launching new flavours and sizes.

Parmalat Colombia to exit from other dairy

To focus on categories in which the brand has more opportunities and competitive advantages, Parmalat Colombia has decided to leave other dairy, instead betting on its flavoured sour milk, hard cheese (Président) and appealing products such as Parfait, which is aiming to compete with Bonyurt with differences such as fruit chunks. Parmalat is also aiming to increase the share of Zymil, its health and wellness brand, which is still mostly seen in drinking milk products.

Confectionery companies are making inroads in other dairy

As was seen some years ago by Colombina with condensed milk, which at that time was mostly focused on confectionery, Super de Alimentos is making inroads in other dairy with Supercoco flavoured condensed milk; a brand extension of its leading sugar confectionery brand Supercoco. The natural categories for confectionery companies to make inroads in dairy have been plain and flavoured condensed milk, in which arequipe is included, but there are also other options, such as shelf stable dairy desserts, which is currently practically unexplored.

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